If the source of economic instability is generally variations in spending, then the Fed should
A) buy gold. B) raise taxes.
C) set money supply targets. D) print more money.
C
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Assuming all excess reserves are loaned out, if the reserve ratio is 25 percent, the money multiplier will be equal to
A) 0.5. B) 2.5. C) 4. D) 5.
Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?
A) the market supply curve reflecting marginal social cost B) the market supply curve reflecting implicit cost C) the market supply curve reflecting marginal private cost D) the market supply curve reflecting external cost
If Bob can produce completed mathematics homework assignments at a lower opportunity cost than Jane can accomplish, then Bob has ________ in completing mathematics homework assignments
A) a relative advantage B) an absolute advantage C) a complete advantage D) a comparative disadvantage
Economist Jones favors a constant-money-growth-rate rule. She says that if the annual money supply growth rate each year is equal to the average annual growth rate in Real GDP, price stability will exist over time. What would economist Smith, who favors activist monetary policy, say to economist Jones?
A) Your analysis assumes that Real GDP is constant over time, and it is not. B) Your analysis assumes that velocity is constant, and it is not. C) Your analysis assumes that you can correctly define the money supply. D) b and c E) a, b and c